1. Catherine has just been diagnosed with severe liver disease and will be out of work for eight months. Catherine has a long-term disability policy that will pay her 70% of her currently monthly salary of $3,500. The premium of the policy is $120 per month and half is paid by Catherine and the balance is paid by her employer. The elimination period is 60 days. Assuming that Catherine is out of work on disability for the full eight months, how much of her total benefits are taxable?
a. 0.
b. $7,350.
c. $9,800.
d. $14,700.
2. Joe, Mike, Donna and James own Who Is Me, LLC. The value of the company is $2,000,000 and each member owns a 25% share. They are all interested in having a buy/sell agreement funded by life insurance. If they use a gross-purchase type agreement, how many policies will they need to have?
a. 1.
b. 4.
c. 12.
d. 16.